Dismissed¶12

Sarfraz Ahmad v. State of U.P. and Another

Allahabad HC6 Apr 2025NA528/11201/2025

Case brief

AI extract

What is this about?

Section 528 BNSS; Section 138 NI Act; Section 142 NI Act; quashing of complaint; cheque dishonour; security cheque; legal notice; summoning order; Complaint Case No. 847 of 2023; Satnam vs. Sarfraz; P.S. Quarsi, District Aligarh; Mahindra and Mahindra Financial Limited; hypothecation details; Annexure-7; matter of trial; M/s Womb Laboratories Pvt Ltd vs Vijay Ahuja 2020 (18) SCC 631; Sunil Todi vs the State Of Gujarat 2022 (16) SCC 762; consigned to record; Neutral Citation 2025:AHC:49312; order date 7.4.2025.

What did the court decide?

Whether the instrument was kept as a security is a matter of trial, as laid down by the Hon'ble Apex Court in Womb Laboratories and Sunil Todi, and cannot be resolved at the quashing stage. ¶11

Sarfraz Ahmad Vs State of U.P. and Another — Cheque Dishonour | Allahabad HC (2025)

What the court decided

AI extract

Outcome

Dismissed

¶12

Issue for consideration

What is the extent of judicial intervention permissible in quashing proceedings under Section 138 of the N.I. Act where the procedural requirements appear to have been complied with? +1 more

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Court's answer

In absence of any pointed-out infirmity in the procedure under the N.I. Act (drawing on 10.7.2023, dishonour on 14.7.2023, notice on 28.7.2023, service, complaint on 12.9.2023), the Court answered the question of entering upon the defence at this stage in the negative.

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Ratio / Principle

Whether the instrument was kept as a security is a matter of trial, as laid down by the Hon'ble Apex Court in Womb Laboratories and Sunil Todi, and cannot be resolved at the quashing stage.

¶11

Key takeaways

Merely on the basis of the document at Annexure-7 (page 40 of the paper book, hypothecation history), no inference can be drawn at this stage that the payments stood made, particularly as there is nothing on record to show that the cheque did not belong to the applicant.ratio¶11

Detailed headnote1 paragraphs

Allahabad High Court (Vikas Budhwar, J.), Application U/S 528 BNSS No. 11201 of 2025, Sarfraz Ahmad v. State of U.P. and Another, order dated 7.4.2025 (Neutral Citation 2025:AHC:49312). The applicant sought quashing of the entire proceedings of Complaint Case No. 847 of 2023 (Satnam vs. Sarfraz) under Section 138 of the N.I. Act (P.S. Quarsi, District Aligarh), arising out of a cheque of Rs. 4 lacs drawn on 10.7.2023, presented 13.7.2023, dishonoured 14.7.2023, legal notice 28.7.2023 and complaint lodged 12.9.2023. The applicant relied on Annexure-7 (hypothecation history) contending the account of the complainant's finance company was inactive, that he had made the entire payments, and that the cheque was merely security. The Court found no infirmity in the procedure under the N.I. Act and declined to enter upon the defence at the quashing stage: per the Apex Court in M/s Womb Laboratories Pvt Ltd vs Vijay Ahuja 2020 (18) SCC 631 and Sunil Todi vs the State Of Gujarat 2022 (16) SCC 762, whether an instrument was kept as security is a matter of trial; nor could any inference of payment be drawn merely from Annexure-7, there being nothing to show the cheque did not belong to the applicant. The application was consigned to record (effectively dismissed).

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Neutral Citation No. - 2025:AHC:49312

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Court No. - 73

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Case :- APPLICATION U/S 528 BNSS No. - 11201 of 2025

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Applicant :- Sarfraz Ahmad Opposite Party :- State of U.P. and Another Counsel for Applicant :- Mohammad Khalid Counsel for Opposite Party :- G.A.

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Hon'ble Vikas Budhwar,J.

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Heard Sri Mohammad Khalid, learned counsel for the applicant and Sri Sandeep Srivastava, learned A.G.A. for the State.

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This application under Section 528 of the B.N.S.S. has been filed by the applicant to quash the entire proceedings of Complaint Case No. 847 of 2023, (Satnam vs. Sarfraz), under Section 138 of the N.I. Act, Police Station Quarsi, District Aligarh, pending in the court of Presiding Officer, Additional Court, District Aligarh.

¶8

Learned counsel for the applicant has submitted that a perusal of the complaint dated 12.9.2023 lodged by the opposite party no.2 against the applicant would make it more evident that the applicant is stated to have taken financial assistance from the finance company of the opposite party no.2 and a cheque stood issued on 10.7.2023 of an amount of Rs.4 lacs which were presented in the bank on 13.7.2023 stood dishonoured on 14.7.2023, a legal notice was issued on 28.7.2023 pursuant whereto summoning order has been passed.

¶9

Learned counsel for the applicant has invited attention of the Court towards a document Annexure-7 at page 39-40 being a document downloaded under the history of the hypothecation details according to which the finance company of the opposite party no.2 is not active and the account of Mahindra and Mahindra Financial Limited is active particularly for the reason that the applicant had made the entire payments and the cheque which was with the opposite party no.2 was as a security and thus it would not answer the description of the debt or other liabilities under Section 138 of the N.I. Act. He submits that a complaint has already been lodged post summoning order against the opposite party no.2. Further submission is that the entire proceedings are illegal in the eyes of law.

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Learned AGA on the other hand submits that whatever might be the arguments sought to be raised they are the matter of defences which cannot be gone into particularly when there had been compliance of the requirement under Section 138 read with Section 142 of the N.I. Act.

¶11

Having heard the submissions so made across the bar, the sole question which arises for determination is the extent of judicial intervention. Apparently, a bare look of the complaint would reveal that the dispute pertains to Rs.4,00,000/- a cheque which is stated to be dishonoured. The cheque was drawn on 10.7.2023 stood dishonoured on 14.7.2023, legal notice was issued on 28.7.2023 which is stated to have been served as reflected in para-5 of the complaint and the complaint stood lodged on 12.9.2023. Thus, in absence of pointing out of any infirmity in the procedure so emanated in the N.I. Act, now a further question arises whether it would be appropriate for the Court to go into the defence regarding the fact that the said cheque was a security and further the fact that the amounts have already been paid while drawing attention towards page 40 of the paper book. The answer in all probabilities in the facts and the circumstances of the case would be "No". The Hon'ble Apex Court in the case of M/s Womb Laboratories Pvt Ltd vs Vijay Ahuja 2020 (18) SCC 631 , Sunil Todi vs the State Of Gujarat 2022 (16) SCC 762 had the occasion to consider the fact as to whether an instrument was kept as a security or not, the Hon'ble Apex Court propounded the law that the same is a matter of trial. Apart from the same the Court finds that merely on a basis of a document which is Annexure-7 at page 40 of the paper book, no inference can be drawn at this stage that the payments stood made particularly when there is nothing on record to show that the cheque did not belong to the applicant in that regard.

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Accordingly the present application under section 528 B.N.S.S. stands consigned to record .

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Order Date :- 7.4.2025 piyush

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Digitally signed by :- PIYUSH KUMAR High Court of Judicature at Allahabad

Sarfraz Ahmad v. State of U.P. and Another

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Sarfraz Ahmad v. State of U.P. and Another

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